KiwiSaver Member ‘Tax Credits’
A recent article in Stuff suggested that half of Kiwis surveyed had no idea what the Member Tax credits are.
This is pretty horrifying considering its been 10 years since KiwiSaver came in and it's all over the internet.
Part of the issue I think comes from the name. It's got nothing to do with tax. I have had clients asking when the money gets to their bank account or how do they apply to IRD.
So as simple as it seems, renaming them something like “Government Contributions” would be better in my mind.
I am glad at least that all DUX clients get full info about them, and only don’t get the Credits because they choose to not put more money into their KiwiSaver (and some cannot afford it, which is what it is, but no one who actually opens our emails would not know about the option).
We send out multiple emails through the KiwiSaver year to remind people and next week we are sending out to everyone who missed out on full credits this past year (we just got all the info from the providers).
But let's clear up some info about them.
For everyone from age 18 to age 65 (can go over 65 if still in your first 5 years of being a member), everyone who contributes to KiwiSaver from 1 July to 30 June will have their personal contributions matched at 50%, so for every dollar you put in, the government puts in 50c.
This money goes into your KiwiSaver account sometime in July or August.
The contributions can be from your Pay or a direct payment, or a lump sum the day before the period ends.
So what do you need to do to make sure you get them?
If you are working and are on PAYE (ie your employer pays you and pays the IRD tax for you) and earn over $34 762 (full-time), then just keep contributing 3%.
If you earn over $26 071 a year, you need to contribute 4%, just ask your employer to sort this.
If you are not working, or are self-employed, you need to set up a payment of $20 a week or make a lump sum before the end of June.
So this is a basic rundown of how they work.
We are organising another FAQ article with lots of common questions on KiwiSaver and Tax credits so let us know if you have any questions on KiwiSaver.
If you like the idea of regular updates and knowing exactly how much you are due for Tax credits, join our advice system. Just email us to look at this.